JetBlue offers $3.6B to buy Spirit Airlines, could kill merger with Frontier

April 6 (UPI) -- JetBlue Airways has made an unexpected offer to buy Spirit Airlines for more than $3 billion, which may ultimately trickle down and spell trouble for another carrier -- Frontier Airlines.

New York City-based JetBlue made the unsolicited offer on Tuesday. Under the proposal, the airline would pay $3.6 billion to acquire Spirit, a budget carrier based in Florida.

JetBlue detailed the offer in an announcement Tuesday and Spirit acknowledged that it has received the proposal, but said only that it's reviewing the deal and would "pursue the course of action it determines to be in the best interests of Spirit and its stockholders."

If approved by regulators, JetBlue would entirely absorb Spirit into its operations -- meaning the Spirit brand would go away.

If Spirit ultimately agrees to JetBlue's offer, it would kill a merger between Spirit and Frontier Airlines that was announced earlier this year. That deal would have created the fifth-largest commercial airline in the United States. Shares of Frontier stock declined in value after the merger with Spirit was announced.

In its announcement, JetBlue did not put a price on any capital costs associated with a merger, such as rebranding Spirit's bright yellow fleet with its own livery -- but did say it would be a multi-year process. File Photo by Bill Greenblatt/UPI

It's believed that JetBlue's offer is part of a strategy to better compete with larger carriers like American, United and Delta. Because it's a low-cost airline, JetBlue makes up for lower fares by selling passengers various items and services on flights, such as food and seat selection.

Federal regulators have to sign off on any merger, but the JetBlue-Spirit deal would not be subject to approval by JetBlue shareholders.

JetBlue already has an existing partnership with American Airlines for routes in the Northeast. It's not yet clear if JetBlue would have to end that partnership to buy Spirit.

The merger with Spirit would also grow JetBlue's footprint in the United States, the Caribbean and Latin America -- and serve almost 80 million flyers per year on more than 1,700 daily flights to over 130 destinations in 27 countries.

In its announcement, JetBlue did not put a price on any capital costs associated with a merger, such as rebranding Spirit's bright yellow fleet with its own livery -- but did say it would be a multi-year process.

Both airlines operate fleets comprised almost entirely of Airbus aircraft, which would make integrating pilot and crew training easier, especially as JetBlue looks to retire its remaining Embraer 190 planes by 2026. The joint fleet would eventually be one of the youngest and most fuel-efficient in the industry.

"While JetBlue and Spirit are different in many ways, we also have much in common," JetBlue CEO Robin Hayes said in a statement.